Undervalued, Nigeria’s Equities Attract New Positioning, Ahead Q2 Earnings

Market Update for July 9, 2018

The Nigerian equity market on Monday had another very volatile session as it tries to resist further decline, ahead of the second quarter earnings season that kicks off any moment from now, as the benchmark All-Share index hit a pause button while seeking direction in the midst of rising insecurity and political uncertainties as the 2019 general elections draw closer. It is expected that the systematic implementation of the 2018 budget would stimulate the nation economic activities which is now experiencing a slowdown, while the monetary authorities-the Central Bank of Nigeria (CBN) worry about excess liquidity and impact of inflation in the system as governments across the country disburse funds for infrastructure project implementation.

It was a strong start for the trading week as the Nigerian Stock Exchange ASI gapped up at the opening of the session, above the previous day’s close and lasted till midday, before pulling back, after which it consolidated by the afternoon to close marginally higher on a very low volume.

During the trading session, it index hit an intraday high of 37,715.30 basis points, from its low of 37,615.49bps, before closing the day at 37,651.89bps, thereby presenting opportunities for players to invest at a discount. We must not forget that this is happening in an economy that is expected to fire up again with the fiscal reforms, especially as the budget has started running, just as electioneering campaign spending, a situation that is further helped by rising oil prices that would enhance government revenue, while Nigeria’s external reserve is looking up.

At this point, medium and long-term position can be taken, while those trading in earnings season should have taken position ahead of the numbers. However, when such numbers do not meet expectations, you must quickly cut you losses and wait for another opportunity to enter.

Market technicals for the session were weak and mixed as traded volume was low in the midst of negative market breadth and improved sentiments, as revealed by Investdata’s Daily Sentiment Report showing a ‘sell’ pressure of 64% and ‘buy’ volume of 36% on a volume index of 0.45 of the day’s total transactions.

The momentum behind the seeming improved sentiment for the day reflected on the money flow index at 33.77 points, up from the previous day’s 31.85 points, an indication that funds are still entering the market as at close of trade.

Index and Market Cap                                     

At the close of trading, the composite index gained a marginal 22.34bps, closing at 37,651.89bps, after opening at 37,625.59bps, representing a 0.06% limp, just as market capitalisation inched N8.09bn up to close at N13.64tr, from an opening value of N13.63tr, also representing 0.06% value gain for the session.

If you are hunting for the right stocks to buy on this oscillating trend, join Investdata Buy & Sell Signal setup. We have a watchlist of stocks for different investment purposes that you may position in, as the market sets for another phrase of recovery. To register and become a member send Yes or stocks to the phones numbers below. Our watch list has increased due to the prolonged correction before now, take advantage of this service to buy right and sell right.

The slight upturn recorded at the end of Monday’s trading was due to price appreciation in medium and high cap stocks, like Dangote Cement, Unilever, Guinness, Forte Oil, CCNN, Flourmills, ETI and Honey well. These impacted positively on the NSE’s Year-to-Date return, reducing the loss position to 1.55%, while market capitalisation gain stood at N28.51bn, or 0.21% above the year’s opening value.

Bearish Sector Performance

Sectorial performance remained bearish for the day, except for the NSE Banking and Oil/Gas that were slightly up, while the NSE Insurance, Industrial and Consumer goods closed in the red. Market breadth was negative as decliners outnumbered advancers in the ratio of 25:20 to halt Friday down market.

Market activities were down in volume and value by 51.45% and 35.19% respectively at 155.17m shares worth N1.99bn, from the previous day’s 319m units valued at N3.07bn. Volume was boosted by trading in financial services and conglomerates stocks like Access Bank, Zenith Bank, FBNH, Transcorp and UBA that witnessed increased trading to top the activity chart.

The best performing stocks for the day were Caverton and C& I Leasing that topped the advancers’ table after chalking 10% and 9.8% respectively to close at N2.24 and N2.47 each, due to their low-price attraction and expectation Q2 earnings reports.

On the flip side, Unity Bank and Multiverse were the worst performing, losing 9% and 8.3% respectively to close at N1.01 and N0.22 on market forces and profit booking.

Market Outlook

We expect the market to look up as low prices attracts new positioning, ahead of Q2 earnings season since equities remain undervalued with higher yields. Investors should review their position in line with their investment goals and take action as events unfolds in the global and domestic environment.

However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were Q2 interim dividend payment  are expected in the market arena very soon.

We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.

Save The Date: Investdata Stock Market Training Workshop

                                 On Saturday, July 28, 2018

Theme- Comprehensive Stock Trading & Investing Toolkit for Rest of 2018

Sub Topics

Review of 2018H1 Market & Economic Performance:  How Fiscal Reforms and Stimulus Will Support the Market/Economy in 2018H2.

In this presentation, the speaker will discuss how historically the Fiscal and Monetary policies have influenced Nigeria’s stock market, the implications for the second half and it would drive equity prices higher as recovery continues.

2018H2 Trading Checklist: How to Find Winning Stocks in Nigeria’s Volatile Equity Market

After the prolonged correction, volatility is here to stay for the rest of 2018. Is it time to start worrying about losses suffered so far, a flattening yield curve or time to relax due to the outstanding earnings season? Better yet, is there a way to harness increased volatility to your advantage? Our facilitator, a stock market expert will show you how to handle increased volatility in 2018. He’ll offer insights into forces impacting today’s market. He will share, using real-time examples, his ultimate checklist to finding winning stocks propelled by volatility. This simple strategy allows you to quickly evaluate stocks and to better time entry and exit points, while understanding market forces moving your portfolio

How To Generate Consistent Superior Equity Returns and Income With Dividend Stocks

Here, the expert will discuss his approach to generating equity income by investing in undervalued dividend stocks, what he looks out for when trading dividend stocks at a discount to historical valuations on multiples of price to sales, earnings, cash flow, book value, and enterprise value to EBITDA. In addition, he requires companies to have positive operating cash flow over the past 12 months, with dividends covered comfortably by cash flow.

Powerful Patterns and Effective Strategies for Trading Shifts in Market Volatility

Recent and ongoing changes in market volatility present both risks and opportunities for discerning traders. Learn some of the most effective strategies for taking advantage of the high-probability trading opportunities available in equities, while minimizing risks associated with stock market trading. The six most powerful patterns in the market to trade, how to know which patterns and strategies to specialize in for consistent results and the critical difference between oscillating and momentum patterns.

Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
https://investdata.com.ng/2018/07/undervalued-nigerias-equities-attract-new-positioning-ahead-q2-earnings/